Eventually, shadow passwords were introduced to have the passwords themselves stored in another place with stricter access rights (readable only by the sysadmin or their group), so even the hashed versions were inaccessible to normal souls, whereas other information traditionally kept in /etc/passwd - e.g. the user's full name - could and can still be retrieved from that file by making it widely readable - just without the passwords, which were moved to the "shadows".

See also https://en.wikipedia.org/wiki/Passwd, section "Shadow file" for more details.

An classic UNIX /etc/passwd file is readable by all local users and in the past used to contain the password hashes. One can download these hashes and crack the passwords offline. At some point the problem was recognized and password hashes were moved to special /etc/shadow file which is accessible only to root and members of shadow group making /etc/passwd useless for extracting passwords.